Good morning.
Tesla CEO Elon Musk reported a record $718 million loss yesterday, but the company’s stock rose after Musk managed to act normal during his earnings call. He began the question and answer portion by apologizing to analysts for dismissing their queries last quarter as “boring, boneheaded questions,” saying “there’s no excuse for bad manners.” He also said Tesla was on track to become profitable in the third quarter. We will see.
Separately, Jim Fitterling, who is slated to become CEO of Dow after the materials science business spins off from DowDuPont early next year, dropped by Fortune’s offices yesterday. The man has a lot on his plate. He is bringing a raft of technological change to the company even as he helps oversee one of the biggest corporate restructurings of our times.
Fitterling steered the conversation to PepsiCo CEO Indra Nooyi’s piece that ran on Fortune yesterday morning, in which she said Pepsi is now “all in” on recycling. Fitterling says the industry has reached a kind of tipping point on that issue. “There are only a couple of times in my career I’ve seen the industry so aligned around something,” he says. The challenge is that banning plastic straws or recycling plastic bottles doesn’t begin to address the full scope of the problem. Dow is pursuing multiple pilot projects, he said, including using used plastic to pave highways, using it in concrete blocks, and turning it into liquid fuel or feed stock for plastic plants. “We probably have 100 different activities in this area. What we are trying to do now is focus on impact.”
When I asked Fitterling why this is happening now, he said: “It’s been percolating for a while. The industry is different now. We’d rather get out ahead of the issue.” The company’s customers also are pushing for change. And Dow employees are a big driver. The company’s millennials are eager to work on these sustainability projects, he says. “They vie to get on (them).”
More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Treasury Borrowing
The Treasury Department will auction $30 billion extra in debt over the next three months, and will borrow 63% more in the second half of this year than in the same half of 2017. This is to cope with the U.S.'s swelling federal budget deficits, which are the result of increased spending and decreased tax takings from individuals and businesses. Wall Street Journal
Starbucks in China
As rumored in recent days, Starbucks has now officially announced a partnership with Alibaba Group to use the company's delivery and supermarket services to deliver coffee in China. Starbucks's Chinese business has been weakening slightly, due to competition from local rivals such as Luckin Coffee that deliver coffee more cheaply. Reuters
Barclays Boost
Barclays beat analyst estimates with Q2 pretax profits of $2.49 billion—good news after a tough few years for the British bank, as it represents a tripling of the profits for the same quarter last year. CEO Jes Staley: "This is obviously a very strong quarter for Barclays, one of the first quarters since the restructuring began where we're really clear of all the major impediments—there's no more litigation hanging over us, no more costs to achieve, no more restructuring costs. One of the first clean quarters for Barclays, and portends for things to come." CNBC
Wells Fine
Wells Fargo has agreed to pay a $2.09 billion fine over its contribution to the 2009 financial crisis. This is on top of the $1.2 billion fine it already agreed to pay in 2016. The latest fine is over allegations that Wells Fargo issued residential mortgages to people who it knew had overstated their income, or who fell short of meeting the company's internal risk threshold. Fortune
Around the Water Cooler
Walmart Suit
A Silicon Valley startup called Zest Labs has sued Walmart for allegedly stealing its technology for extending the shelf-life of produce. Walmart's Eden tech "looks, sounds, and functions" like the Zest Fresh tech, the company complained in its $2 billion suit. Zest says it worked with Walmart for years on the technology, and was "stunned" to see the larger company claim to have developed it in an internal hackathon. Reuters
Richer Buffett
Warren Buffett is likely $2.6 billion richer after stellar performance at Apple—in which the Berkshire Hathaway supremo reportedly owns 239.6 million shares—led to a 6% share price bump. Fortune
Google China
Google is allegedly developing censored services for the Chinese market, including a special search engine and news app, the latter of which will reportedly come out first. But there's a hitch (apart from the human-rights implications) in the form of the U.S.-China trade war, which has apparently made it difficult for Google to "engage" China's Internet censor. TechCrunch
3D-Printed Guns
Those banned 3D-printed gun schematics are back online after gun activists responded to a temporary restraining order on Defense Distributed by setting up a new site for their publication. Except, of course, the files were never offline—that's not how the Internet works. Nonetheless, are the activists right to say that code is free speech? It's a complex issue. Fortune
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
